I would like to issue employee paystubs electronically. Is there any legal requirement that employees must receive them in hard copy on paper? Do employees have to agree to receiving them electronically?
California Labor Code Section 226(a) requires that paystubs be issued “in writing” and that deductions must be recorded “in ink or other indelible form.”
While nothing in the law specifically allows for these paystubs (also known as itemized wage statements) to be issued in an electronic format, California’s Labor Commissioner has issued an opinion letter indicating doing so is permitted with certain limitations, including the opportunity for employees to opt out of the electronic delivery method.
According to the Labor Commissioner’s Opinion Letter 2006.07.06, employers may distribute itemized wage statements electronically as long as:
• Employees still have the option to elect to receive their itemized wage statements on paper;
• The electronic itemized wage statements contain all the information required by Labor Code Section 226(a);
• Employees who are provided with electronic wage statements have the ability to easily access the information and convert the electronic statements into hard copies at no expense to the employee;
• Pay records are retained by the employer for a period of at least three years and are accessible by employees and former employees; and
• Proper safeguards are established for the electronic wage statement system to ensure the confidentiality of the employee’s information, such as unique employee identification numbers and confidential personal identification numbers (PINs) to allow access.
It is important to note that opinion letters issued by the California Labor Commissioner do not have the force of law, and are subject to interpretation by the courts and/or future action by the Legislature.
Employers are therefore advised to consult with legal counsel before switching to electronic wage statements for advice on setting up a system that will meet all the requirements established by the Labor Commissioner.
The Labor Law Helpline is a service to California Chamber of Commerce preferred and executive members. For expert explanations of labor laws and Cal/OSHA regulations, not legal counsel for specific situations, call (800) 348-2262 or submit your question at www.hrcalifornia.com.